Sky has promised investors that it has “a strong set of plans” to reduce the number of customers leaving the service after revealing that year on year churn remains “at a level higher than we would like” at 11.5%.
The UK’s largest pay-TV provider is under growing competition from cheaper rivals, most notably Netflix and Amazon which both offer wallet-friendly streaming services with their own exclusive and first run shows as well as major Hollywood movies.
In addition, Sky has faced an unprecedented level of competition for sports rights from BT which in recent years has secured exclusive rights to key events which are shown on BT Sport channels available in a range of low cost TV packages.
While, anecdotally, some traditional pay-TV households are shifting to Sky’s own flexible and low cost streaming service, Now TV, many are abandoning the firm entirely.
In order to retain customers and drive down the churn rate Sky plans to launch a “tenure-based loyalty programme” which rewards those customers who’ve been with the firm for a qualifying period of time.
A similar service already operates in Sky’s Italian business and the company claims “initial trials have been encouraging” in the UK.
While Sky has been successful in defending many key rights, competition on so many fronts is driving up its programming costs, forcing it to invest more in its own original shows to avoid bidding wars.
Today the firm admitted that its current blockbuster Premier League deal, which saw it pay £1.27bn to retain the lion’s share of matches, has dragged down operating profit by £97 million to £1.5bn.
The firm’s greater than ever content costs are making it more reliant on customers taking additional services such as broadband and its new mobile phone offering.